How to access your super early

Tighter rules around early access to superannuation are on the drawing board, writes Sophie Elsworth

CASH-strapped Australians looking to dip their hands into their superannuation savings to pay for medical treatment may be forced to undergo stricter rules to access their own money.

Latest figures show Australians who have accessed their retirement savings early due to compassionate reasons withdrew a massive $290 million in the 2016/17 financial year.

In addition to this about $550 million was accessed early for financial hardship purposes in the 2015/16 financial year.

For Australians who apply to access their super early circumstances can include:

They are in severe financial hardship;

Have a terminal illness;

Are a temporary resident;

Have less than $200 in their super fund;

Meet compassionate grounds including for medical, mortgage, disability, palliative care reasons or to pay for a funeral.

The Australian Institute of Superannuation Trustees’ chief executive officer, Eva Scheerlinck, said there should be tougher processes in place to approve the early release of super for medical treatment.

This includes having an independent medical panel of assessors to ultimately decide whether an applicant can dip into their superannuation prematurely. “It is a savings vehicle that belongs to the members and in very limited circumstances it should be there as a safety net for people who are in dire circumstances,’’ Ms Scheerlinck said.

“Having an independent medical panel would provide some safeguards for early release.

“We are worried about the advent of new shonky operators and the way they are encouraging people to take money out of their super and writing supporting letters from doctors – it’s a money-making operation with no regards to people’s retirement savings.”

AIST has made this submission to Treasury.

For super now to be released early due to health reasons, two medical practitioners – at least one who must be a specialist – can determine whether treatment such as lapband surgery is necessary and a person can access their retirement savings.

The amount that can be released under compassionate grounds is not capped – this is different to financial hardship reasons where there is an annual cap of $10,000.

Intrust Super CEO Brendan O’Farrell said his fund had seen a 40 per cent increase in successful attempts by members to access super early over the past three years. These are approved by the Department of Human Services.

“This is obviously an alarming rate of increase,’’ Mr O’Farrell said. “It is critical to correctly assess complex medical conditions and ensure the appropriate criteria is in place that does not detrimentally impact on the government retirement savings policy.”

The ATO is set to take over the decision-making process of early release under compassionate grounds later this year.